A reader with a super balance heading towards $800,000 has asked Money magazine’s Paul Clitheroe whether she can drop the death, total and permanent disability and income protection cover her fund has been deducting for years.
She is over 50, her adult children are largely independent, she has no other debt, and her husband has his own job, super and insurance. She also holds an investment property that is only slightly negatively geared.
Clitheroe says that on those numbers she probably no longer needs this type of cover. He recalls cancelling his own life and income protection around age 50 once the mortgage was gone and the kids were self-sufficient, particularly as premiums were getting expensive.
He suggests cover may be worth trimming if your children are financially independent, your partner could manage without your income, major debts are cleared, you have substantial assets and enough savings to ride out an extended period off work.
The catch: if your health or circumstances change later, new insurance can be hard or costly to get.
What it means for your money
Check what your fund charges for each type of cover and run your own numbers before cancelling anything. Premiums come straight out of your balance, so unneeded cover is a quiet drag on retirement savings. Consider speaking to an adviser first, since this is general information only.
Source: Money Magazine